Judged from a western perspective, China has an enviable problem. After expanding by 12 per cent in 2007, the Chinese economy will grow more slowly in the coming year, perhaps by around 8 per cent. A moderate reduction in growth would hardly spell disaster. But for all the talk of de-coupling, the Chinese economy still depends on how the US, Europe and Japan fare.

The longer the financial turmoil lasts in the US and Europe, the more severe will be any economic downturn. Credit markets are gummed up, curtailing company investment and consumer spending. Lower imports over the coming months look certain.

With more than a third of its exports going to the US and Europe, China will be affected. Low-cost exports may not collapse, but anecdotal evidence suggests that exporters are already feeling the pinch. A looming recession in Japan makes switching exports to other high- income markets a remote option.